Walgreen CFO Faces Big Tasks at Home and Abroad

With 2012 coming to an end, it’s time again to look at a group of CFOs who will factor prominently in their companies’ successes and failures over the next 12 months. This year’s list includes veteran finance chiefs taking on expanded roles and well-known names looking to make a mark on their new companies – including one who stepped back into a divisional role that could send her career to new heights.

Walgreen CFO Wade Miquelon’s duties in 2013 will challenge him on both sides of the Atlantic Ocean, as he leads a major international expansion while still focusing on getting the pharmacy chain’s U.S. sales back on track after a messy dispute with benefits manager Express Scripts.

Miquelon, who has extensive overseas experience, was named president of Walgreen’s new international division in September, giving him oversight of Walgreen’s integration of Alliance Boots. Walgreen agreed to buy the European drugstore chain this summer in a two-step deal that will be completed in 2015 and was valued at $16.2 billion in cash and stock when the deal was announced, excluding the assumption of Alliance Boots’ debt.

Walgreen

Walgreen CFO Wade Miquelon will divide his attention in 2013 between a focus on returning the company’s U.S. stores to sales growth while helping lay the foundation for its coming acquisition of the rest of European drugstore chain Alliance Boots that it didn’t already purchase this summer.

In an interview, he said one of his responsibilities will be to establish a global procurement organization with Alliance Boots. There’s only a short list of companies, including Wal-Mart, that have successfully established global pharmacy purchasing contracts, according to Mark Miller, an analyst with William Blair, which rates Walgreen shares a “buy.”

“It’s not just a numbers exercise,” Miller said, but one with “broader strategy components.” Global procurement represents a “compelling” opportunity, he added.

Miquelon said that “the beauty of the two-step [merger agreement with Alliance Boots]” is that it gives the companies time to “co-design the future business model.” Walgreen and Alliance Boots will work to eliminate a combined $100 million to $150 million in costs over the first year of the partnership and to hit $1 billion in savings by the end of 2016. In terms of his relationship with Alliance Boots management, Miquelon told CFO Journal that “leaving them alone is the best thing to do” because they know that business the best and do a good job running it already.

Miquelon, 48, spent 16 years with Procter & Gamble and gained international experience with the consumer products giant’s operations in Bangkok, Singapore and Switzerland, where he was the head of finance for P&G’s Western European operations. Between P&G and joining Walgreen in June 2008, he was CFO of meat producer Tyson Foods.

By not overseeing Alliance Boots’ day-to-day operations, Miquelon will be able to focus on reinvigorating sales in the U.S., which some observers say is his chief task. Walgreen sales slumped this year due to a dispute with Express Scripts, which forced some prescription customers to move their business to competitors in early 2012; the two came to terms this summer, and Walgreen is trying to woo back its former customers.

“His biggest responsibility, to me, is still being CFO of the U.S. business,” says Andrew Wolf, an analyst with BB&T Capital Markets, which rates Walgreen stock a “buy.” “He has a lot to do to get [its] sales back on track.”

Earlier this month, Walgreen’s said its total same-store sales dropped 6.2% in November from the same month a year earlier, worse than analysts had expected. But investors took comfort in the news that year-over-year pharmacy sales in November weren’t down nearly as much as they were in October, suggesting Walgreen is winning back some of its Express Scripts customers back.

Wolf said Miquelon has demonstrated skill in merchandising as well as financial acumen as Walgreen CFO, but cautioned that he will need to carefully manage its cost structure as more customers return. That’s because Walgreen reduced pharmacy staff as it lost customers, and Wolf said he hopes it adds back workers fast enough to maintain customer service standards, even if it could boost margins by keeping staffing low.

Comments (3 of 3)

Ok, lets go squeeze the supply chain for a few dollas. That tune has played many times, usually by poor performing companies. I smell a short...

9:12 am December 13, 2012

T Jones wrote:

Nothing Mr. Miquelon does is for the short term. His and Walgreen's visions are for long term profitability. That is why he was willing to stand up to Express Scripts, knowing profits would take a big hit in the short term.

10:27 pm December 12, 2012

John Smith wrote:

He has cut costs in the US to reach short term profit goals, and their revenue shows the effects. Not impressed.

Deloitte's Financial Reporting Alert discusses certain key accounting and financial reporting considerations related to the current economic conditions in the eurozone and Puerto Rico, including a summary of financial reporting implications that would result from a country's decision to exit the eurozone and an outline of disclosures recommended by the SEC in 2012 about European sovereign debt.